Chancellor’s Budget measures announced | Industry reaction and analysis

After weeks of speculation, we finally have it. Chancellor Rachel Reeves has laid out her budget measures to Parliament today, giving wealth managers plenty to think about.

Whether it’s the impact on growth, the bond markets, individual and business cash flow and overall financial wellbeing, the ‘smorgasbord’ approach gives wealth managers lots to work through.

You can check out all the budget analysis, news and views on all measures relevant to wealth managers here on WealthDFM’s dedicated Autumn Budget news category

Experts from across the industry have shared their reaction to today’s budget news with WealthDFM as follows:

Tom Stevenson, Investment Director at Fidelity International, comments: “Alongside voters, MPs and the business community, financial markets formed a fourth key audience for today’s Budget. With every one percentage point shift in the cost of borrowing worth around £17bn to the government, keeping the so-called bond vigilantes on board today was a key focus.

“Investors were looking for reassurance today – that the Chancellor had rebuilt a prudent level of fiscal headroom, that tax rises would be balanced by some spending restraint, and that the government would not need to borrow significantly more. Inflation expectations were a further consideration. Investors were watching closely for any measures that might add to inflation pressures, potentially complicating the Bank of England’s ability to reduce interest rates. Above all the markets wanted a sense that the UK’s animal spirits can reawaken.

“During the speech, the pound strengthened slightly to $1.32, gilt yields – which had initially fallen sharply after the early publication of the OBR report – settled back to around where they began the day, and then eased again as the measures were digested. The FTSE 100 rose modestly, with the more domestically focused FTSE 250 up around one percent.

“All in all, the Chancellor can feel relieved about the market reaction to her second Budget. The steadiness of the market response suggests that investors were reassured by the overall fiscal approach.”

Lindsay James, investment strategist at Quilter said: “This has already become one of the most memorable Budget statements to date as a result of the early leak of the Office for Budget Responsibility’s forecasts, rather than necessarily the measures brought about by the Chancellor. It has given markets an early look at the Budget measures and for now the response is fairly muted. An initial fall in bond yields has quickly reversed, but as we saw last year the true impact is not necessarily felt for days or even weeks later.

“While Rachel Reeves attempts to spin the OBR’s forecasts, it is clear that reality is far from rhetoric. Economic growth forecasts for 2025 may have been upgraded, but productivity has been downgraded, inflation is expected to be higher and spending is going up. Indeed, borrowing is rising and only being cut towards the end of the forecast period. Compared to March’s forecast, it is estimated to be £21 billion (0.7 per cent of GDP) higher in 2025-26, but still lower by £6 billion (0.2 per cent of GDP) in 2029-30, resulting from some of the more significant tax raising measures not kicking in until 2028, bringing some added uncertainty over its revenue-raising potential.

“Furthermore, the government has doubled down on welfare spending, with it now set to rise by an average of £11bn a year up from 2026 to the end of 2030. This makes the tax rises announced today permanent at least for length of the Labour government, not a temporary measure necessary to fill any fiscal holes or build up buffers. For a government looking for economic growth, this is not necessarily the best approach to achieving it.

“There is some welcome good news that inflation will be helped by measures on energy bills, dampening it by just over 0.4% next year and theoretically raising the potential of more significant interest rate cuts. But it is worth noting that the OBR have increased their forecasts for CPI since March due to existing price pressures, which threatens to negate the impact of this measure. However, moving to a single assessment of the fiscal rules per year is a positive development and should help remove some of the daft tweaking of fiscal policy based on what a forecast says.

“For now, however, Reeves and this government continue to hope that growth somehow returns and inflation falls. The trouble is that many of the measures announced by Reeves today are untested, such as a mansion tax. Distortions and unexpected behaviour changes will occur and as such make some of these forecasts at risk of further cuts.”

David Zahn, Head of European Fixed Income, Franklin Templeton Fixed Income, provides his view post the Autumn Budget

“Today’s UK Budget announcement from the Chancellor sees an increase in spending and borrowing through 2028. However, most of the planned tax rises do not kick in until 2029 and beyond. This approach effectively kicks the can down the road until the next parliamentary election to deal with the spending gap. The probability that those tax changes are delivered seems low given it will be a new parliament, potentially with a different majority party. 

“Meanwhile, the OBR’s revised outlook — lower growth post-2025 and higher inflation — should lead Gilts to see higher yields in the long end of the curve.”

Michael Field, chief equity strategist at Morningstar, said:

“The government retained the ISA allowance retained at 20k but changed the allocation such that 8k must be in investments, not cash. Last year around 100bn was saved in ISAs, of which 70% was cash and the rest in equities. This ratio should change to 60/40, which will mean at least another 10bn in equities. This is equivalent to around 0.5% of the FTSE 100, but of course there is no guarantee that any of this is direct to UK equities.  

“An almost £40 billion social and affordable home program was announced, with plans to deliver 1.5 million homes over the next decade. Items like planning reform and tax relief on specific works should help UK homebuilding stocks. Expectations were clearly for more however, with shares for the major homebuilders down today. Bad news for existing shareholders, but we see great opportunity in the sector.  

UK banks, usually a big beneficiary or victim of budgets, were up around 3% today. This mainly comes on the back of no mention of them in the budget, which having been warned that there could be a levy placed on the sector, is good news. For the most part however, we don’t see much value in UK banks currently.”

Clive Beagles, Senior Fund Manager, JOHCM UK Equity Income:

“A positive development, but the gains are largely back-loaded, as major tax-raising measures, most notably the salary-sacrifice changes, won’t come into force for several years. That said, the Debt Management Office has released its gilt financing requirements, which are slightly lower than previously expected for 2025–26.

“The measures on energy bills, fuel duty, and rail fares are expected to lower inflation by about 0.4 percentage points, giving the Bank of England room to cut rates more aggressively, likely starting in December. These lower rates should help offset the absence of supportive housing policies.

“Most importantly, Rachel Reeves seems to have eased concerns among most of her MPs, making her position more secure than it appeared ten days ago. With the risk of an Andy Burnham–style leadership challenge now looking less likely, gilt yields should see some downward pressure.”

James Lynch, Investment Manager at Aegon Asset Management, said:

“Growth up now, down later. Inflation dips next year, then climbs. Spending, taxes, fiscal headroom and borrowing up too.

“For markets there are short term wins – inflation is down by 0.4% thanks to freezing rail fares and lower energy bills, clearing the way for a Bank of England cut in December and into 2026. Additionally, the gilt remit for this year did not increase as much as expected, with several gilt supply events cancelled as a result.

“Over the longer term however, spending has been increased, compared to previous forecasts, paid for by taxes which supposedly start in 2028. Realistically, with an election looming the following year, these quite complicated taxes, such as 3p per mile on Electric Vehicles or valuing high end properties for the mansion tax might not happen. So, the familiar cycle of higher spending today paid by future taxes, which may never materialise, continues.”

William Scoular, Head of Business Development, Investec Real Estate, said, “While the Budget’s non-inflationary stance reinforces expectations of falling interest rates, the commercial real estate lending market is already showing clear signs of renewed momentum. In our recent survey, conducted ahead of the Budget, investors reported a material improvement in funding conditions, with just 22% now viewing access to finance as a barrier to growth, down from 45% two years ago, and new lending in the first half of 2025 rising by 33% year-on-year.

“Against a market backdrop where the Budget has delivered mixed reactions from institutional investors – with some concerned about further pressure on smaller landlords, shifting liquidity, and potential drag on returns – a clearer rate trajectory provides welcome stability. As borrowing costs ease and confidence rebuilds, conditions are set to strengthen further, supporting continued activity across the Living sectors.”

John Stopford, Head of Managed Income at Ninety One, comments on the UK Autumn Budget: “The budget looks less Gilt friendly at first glance than expected. The OBR has assumed higher nominal GDP due to stickier near-term inflation, which boosts the tax take and leaves a smaller reduction from the March forecast in the Chancellor’s headroom than anticipated. Borrowing is higher through most of the forecast period before delivering a larger current surplus in the final year, with spending increases front loaded and taxes backloaded. So while the headline figures are more positive, the detail and route by which they are expected to be met looks less convincing.”

Andrew Jones, Portfolio Manager on the Global Equity Income Team at Janus Henderson Investors, said:

“There were no significant negative surprises, given the tax increases already rumoured. Bonds and equity markets have taken a positive initial view. The Chancellor has walked a narrow path by raising taxes in a way that does not add to inflation. This has created scope for the Bank of England to cut interest rates further, created a larger fiscal buffer to remain within her fiscal rules over the forecast period and increased spending in some select areas.” 

Guy Foster, Chief Strategist, RBC Brewin Dolphin, said:  

“There are always political and economic stakeholders to be managed when releasing a budget. The latter, including the OBR and the financial markets, seem to have been appeased but it typically takes longer to assess the former. It was well known that the Chancellor would need to cut spending or raise taxes because changes to the OBR’s growth forecasts meant that she was no longer on track to meet her fiscal rules. In response, she has undertaken to increase borrowing in the near term, whilst raising the tax burden later.

“The bulk of the delayed pain will come from keeping tax thresholds frozen allowing more taxpayers to drift into higher tax brackets as their wages rise. In addition to this a smorgasbord of additional measures have avoided the need to break a manifesto commitment by raising one of the big taxes such as income tax.

“Investors had been braced for worse and seem to be breathing a sigh of relief in the hours after the release of the budget details. Bond yields which ultimately determine the cost of new borrowing for the government have fallen slightly. The pound is up and there is not meaningful change in the outlook for interest rates.”

Guillermo Felices, Global Investment Strategist for fixed income at PGIM, said:

“This Budget was all about regaining confidence of both the market and Labour MPs, and it is doing the minimum to achieve that. The market reaction is consistent with some confidence being restored, with gilts rallying and sterling stronger versus the US dollar and euro.

“Overall, the Government has increased headroom by £22 billion (versus the £15 billion expected), introduced measures that will help inflation to fall further, and reduced cash requirements a bit, meaning that UK government debt issuance numbers will be more reasonable. This should pave the way for the Bank of England to cut rates, which is positive for gilts.

“The key remaining uncertainties are the fact that the tax increases are backloaded so revenues will only be realised in the future; growth assumptions were trimmed lower, though are still very optimistic hovering at around 1.5% after 2027; and politically, I am not sure the Government has done enough, especially after freezing income tax thresholds. These uncertainties could easily come back to haunt the gilts market in the next few months.”

Liam O’Donnell, a fixed income manager at Artemis, said: “The big shock for me is that most of the tax raising/fiscal consolidation is heavily backloaded – starting in 2028/29. It just smacks a bit of extend and pretend. Spending is slightly higher near term and the narrative that the Bank of England might have to come to the rescue via more interest rate cuts because higher taxes crush growth has vanished, in my view. Today I think we’re seeing a bit of a relief rally from changes from the DMO remit (they’ve cancelled six auctions and left the market with only a sliver of longs supply via syndication). But ultimately, I don’t think this is positive for the gilt market because what we got – in addition to the early release farce from the OBR – was another episode from Labour where they deliver an unpopular budget without either meaningful spending reductions or meaningful tax increases in the near term. Their continued ability to extract political loss from what seemed like a winning position is impressive.”

Matthew Amis, Investment Director – Rates Management at Aberdeen Investments, comments on gilt market reaction to the Budget said: “This was never going to be a budget for growth or to release animal spirits, this was a budget to attempt to build credibility. Credibility in the gilt market and credibility within the Labour party.  Is it the credibility builder we were looking for? No, but is this a budget to cause a gilt market storm? Again no.

“The fiscal headroom increase is welcome, but the fiscal consolidation is back-loaded. This is not a budget that finally faces up to the somewhat fraught fiscal situation the UK finds itself in. But unlike in recent years, it doesn’t materially make it worse.

“The inflation busting measures again are welcome, but will this mean the Bank of England materially accelerate interest rate cuts? Probably not.

“In terms of gilt supply, no real increase, which in itself is a positive story. “The limited gilt market reaction so far is probably fair. We move on.”

Mark Preskett, Senior Portfolio Manager at Morningstar Wealth, said:

“Today’s UK Budget has not derailed Morningstar Wealth’s broadly positive outlook for the UK equity and bond markets. Significant focus has been on the UK economy’s fiscal headroom and the improvement here, based on today’s OBR forecasts, is encouraging.

“With inflation showing recent signs of moderation, we would expect Gilt yields to continue their downward trajectory once the dust settles from the Budget. UK business owners will be breathing a sigh of relief as there were no nasty surprises, like the National Insurance hike in the 2024 Budget.

“However, the UK dividend tax hike – which impacts our home market more than others given its higher payouts – is a clear disincentive for stocks and there was no mention of specific UK equity incentives within ISAs.

“Overall, that sterling has strengthened today against both the US dollar and the Euro – a reflection that the Budget has been reasonably well received by investors.”

George Godber and Georgina Hamilton, co-managers of Polar Capital’s UK Value Opportunities Fund, have shared this reaction with us saying: “This Budget goes a long way to deliver what UK bond markets have been hoping for: it avoided inflationary tax increases while introducing a set of tax increases that are, if slightly patchwork, broadly credible. A raised deficit headroom to £22bn – well ahead of expectations – and the lack of any rise in the national living wage above what was expected are yet more positives. The inclusion of deflationary measures, such as freezing rail fares and lowering energy levies, further supports the case for lower rates ahead.

“The growth outlook may have been modestly downgraded yet remains in line with expectations and positions the UK in the top half of the G7. As financing conditions improve, we see a real opportunity for lower bond yields to unlock growth, particularly for domestic mid-cap companies and the wider UK economy.  In 2026 we expect the refinancing headwind that has plagued the UK for several years to burn out, providing meaningful support for UK domestic earners and rate-sensitive companies.”

Simon Allister, Head of Wealth Planning at LGT Wealth Management, says:

“We should recognise that the Government is engaged in a delicate balancing act: addressing the need to raise revenue while still ensuring the UK remains an attractive place to live, build wealth and invest. This is a conversation playing out across much of the world, as government grapple with high national debt – part of the lingering legacy of COVID – and rising pressure on public finances. 

“One of the most challenging aspects of this Budget for clients has been the sheer intensity of speculation in the lead-up. Now that we have a clearer sense of what to expect in the year ahead, I’ll continue to urge people to take their time, reflect, and avoid the temptation to overhaul long-term plans in response to shorter-term politics. 

“For the wealthy, taxes are just one part of a wider picture that includes quality of life, education, professional opportunity, and the climate for business growth and entrepreneurship. These factors have far greater influence on long-term outcomes than any single fiscal policy.” 

Ola Adeosun, Head of Regional Wealth Planning and Family Governance at LGT Wealth Management, says:

“If I think back on the entrepreneurs and business-owning families I’ve worked with, what has struck me most over the last year – amid the proposed changes in tax policy – is how proactively family businesses have responded to the uncertainty ahead. Yet in many cases, the biggest challenges they face don’t come from tax policy itself, but from a lack of planning, governance structures, and the complex relational dynamics that hold a family together.

“That’s why, for me, the silver lining in the Budget noise is the way it has prompted many families to begin long-postponed conversations – discussing succession, values, roles, purpose, and how to support the next generation. It is vital that families understand what the changes truly mean for them and seek informed advice rather than react to headlines.

“The real opportunity right now is to use this noisy inflection point to reinforce the family foundations that outlast the passing political weather.”

Dominic Thackray, Independent Financial Adviser at MHA, said: 

ISA Reforms from April 2027 – £12,000 ISA allowance to use for cash or investments, with an additional £8,000 allowance for investments only. Over 65s will be allowed to use the full £20,000 ISA allowance however they choose.

Based on limited tax raises, this isn’t driven by fiscal responsibility and is trying to change our behaviour – the OBR leaked budget suggests this cut this only raises £0.1bn a year.  As well as further unnecessary complexity, this is something that makes it harder for those saving for a home, in a market already punishing for first time buyers.

While Reeves is correct to suggest that long term, you should expect better returns by investing, investing can be complicated, isn’t without risk and isn’t appropriate for those who don’t want their capital at risk. Why not better educate UK savers on the benefits of investing, make investments easier to access and close the Financial Advice gap – much more could then be done to drive investment. The US doesn’t have an equivalent of an ISA allowance, and yet retail investors drive money into the US economy.

Simon Bashorun, Head of Advice at Rathbones Private Office, said:

“The mansion tax is effectively a wealth tax, disproportionately impacting London and the South East where property values are typically higher. Yet, it is only expected to raise £400–£500 million – a drop in the ocean compared to the multibillion-pound fiscal gap – raising the question: is the juice worth the squeeze?

“The policy is fraught with practical challenges. Valuations will inevitably be contested, and annual assessments for unique, high-value homes are costly and prone to disputes. A surge in appeals could overwhelm government resources, making the system inefficient and expensive to administer.

“Economically, the tax risks creating price cliffs near the threshold, discouraging transactions and renovations. This could stifle housing development and even reduce property tax revenues – undermining the government’s objectives.”

Rebecca Williams, Divisional Lead of Financial Planning at Rathbones, said:

“Capping salary sacrifice at £2,000 is a blunt instrument that risks doing more harm than good. It would strip away a key incentive for employers to boost pension contributions, undermine efforts to tackle the retirement savings gap, and pile extra costs on businesses already under pressure. Worse still, it sends the wrong signal at a time when we should be encouraging long-term financial resilience, not making it harder. This isn’t just a technical tweak – it could have real-world consequences for workers’ futures and employers’ ability to offer competitive benefits.

“The cap also complicates efforts to stay below the £100,000 threshold, where personal allowance tapers and childcare benefits are lost. While personal pension contributions can help, they often require filing a tax return and dealing with HMRC. Stable pension policy is crucial to maintain trust and give people confidence to plan long term.”

W1M’s James Carter, a fund manager overseeing Fixed Income investment, said

“We can be cautiously optimistic about the measures announced by the Chancellor of the Exchequer today. The markets have initially reacted positively, with sterling moving higher and Gilt yields settling 3-4bps lower at most maturities after a period of volatile trading upon the unprecedented leaked release of the Budget by the OBR.

“Markets will cheer the additional tax revenues through the well-flagged tax rises, which have led to an improved fiscal headroom of £22bn to the balanced budget rule, above the upper end of the expected £15-20bn range. However, optimism is somewhat tempered by the back-loaded nature of the measures – with borrowing requirements only falling in the latter years of the forecast, raising the chances of disappointment further down the road.

“While the OBR has increased its growth forecast to 1.5 pc from 1pc for this year, we cannot ignore their downgraded forecasts for the following years, which leaves real GDP growth between 2026-2029 0.3 pc a year lower than the budget watchdog expected in March due to a weaker outlook on productivity gains. Given that the UK’s public finances were already in better shape than many of its peers, the Chancellor will be hoping that inflation starts to decline measurably over time and a virtuous cycle takes hold, with rate cuts more likely, Gilt yields declining, and these growth projections adjusted upwards against a more stimulative monetary policy backdrop.”

Stuart Mellis, CFO, Optalysys, said:

“If the UK is to remain a great place to start and scale a business, increasing both personal and company EMI limits is a sensible move. The government, however, needs to also revisit the threshold for Business Asset Disposal Relief and extend it. The UK cannot ignore the growing number of entrepreneurs choosing to leave the UK. A combination of increasing EMI limits, simplifying share option scheme administration and tailoring CGT rates for scale-up teams are essential to encourage UK-based entrepreneurs to stay in the UK and build world-leading companies here.”

Duncan Johnson, CEO of Northern Gritstone, said:

“Entrepreneurs’ Relief was the best tax regime I’ve seen implemented by a Labour Government. It supported the innovation economy, and the benefits were capped at a sensible level. With constant changes since it was first introduced, the scheme is no longer fit for purpose, and I would have liked to see the policy reset today, so it can go back to what it was meant to do: help and encourage entrepreneurs.”

Tanya Suarez, CEO, IoT Tribe, said:

“The Government’s AI investment plan announced earlier this week, including a £500m Sovereign AI Unit and another £100m to buy domestic AI hardware, is a strong commitment to the UK’s technology ecosystem. However, we’re seeing more and more UK firms head to the US to seek deeper pools of funding or to be acquired. If the UK is to achieve sustained economic growth, we must find the cash to invest in the technologies in which the UK excels.

“This is not a niche opportunity but a critical path to growth and key to reinvigorating a UK-wide industrial base. It is vital to strengthen our technology sovereignty when national security and supply chain resilience are paramount as well. To reaffirm its commitment to being a world leader in science and technology, the UK must align these public investment commitments with incentives for private investors to support later-stage AI and quantum startups. Although the Chancellor made important changes around the Enterprise Investment Scheme (EIS) and signalled her intent to keep the UK’s most promising scaleups on these shores, we need to see further action to really shift the dial.”
Marc Acheson, Global Wealth Specialist at Utmost Wealth Solutions, said:

“The government has introduced a cap on relevant property Inheritance Tax charges for trusts which held property excluded from the scope of IHT at 30 October 2024 for former non-doms. The relevant property charges are capped at £5 million over each 10-year cycle.

“They will also explore how to further develop its tax offer for high-talent new arrivals, to build on the success of the existing regime and bolster the ambition for the UK to remain a competitive destination for growth-driving global talent and support internationally mobile individuals to establish themselves and their businesses in the UK.

“Taken together, these two measures appear to be an acknowledgement that the changes announced in last year’s Budget to the non-dom regime went too far, that the UK has lost too many of these individuals, and that policymakers have to do more to stem this outflow and get the country back to becoming an attractive destination for wealth. This is particularly important given the country’s top 1% of taxpayers contribute to a third of all tax revenue.

“However, questions marks remain as to whether these measures will be effective in restoring trust among non-doms and the wider HNW community and prevent further departures. The £5m cap, while limiting the amount non-doms may ultimately have to settle, still represents a significant new charge for individuals who previously paid nothing before April 2025. Additionally, with the Government announcing £26 billion of tax-raising measures in this Budget alone, it is difficult to see how this will encourage new wealthy individuals to move to the UK.”